IRS Notice: Transition Rule for Dividends Under CFC Anti-Avoidance Provisions (IRC §951(a)(2)(B))

The IRS has published a notice announcing forthcoming proposed regulations implementing a transition rule under the One Big Beautiful Bill Act that modifies how I.R.C. §951(a)(2)(B) applies to certain dividends from controlled foreign corporations. The transition rule prevents certain dividends from being treated as dividends for purposes of reducing a U.S. shareholder’s subpart F income or GILTI inclusion, unless the dividend increases the taxable income of a U.S. person subject to federal income tax. The notice provides guidance on determining whether dividends increase taxable income, including look-through rules for partnerships and S corporations, special rules for tiered structures, and coordination ...